Question: A problem often discussed in the engineering economy literature is the oil-well pump problem.} Pump 1is a small pump; Pump 2 is a larger pump

A problem often discussed in the engineering economy literature is the "oil-well pump problem."} Pump 1is a small pump; Pump 2 is a larger pump that costs more, will produce slightly more oil, and will produce it more rapidly. If the MARR is 20%, which pump should be selected? Assume that any temporary external investment of money earns 10% per year and that any temporary financing is done at 6%.

Pump Pump 2 ($000s) -S110 +115 30 Year(S000s) -$100 +70 2

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